ICF International Inc (ICFI) stock plummeted over 16% in pre-market trading on Friday, following the company's fourth-quarter earnings report and disappointing guidance for 2025 that raised concerns over its federal government business.

While the company's Q4 non-GAAP earnings beat analyst estimates slightly, its revenue for the quarter missed expectations. More crucially, ICF International provided a weaker-than-expected outlook for Q1 2025 and the full year, warning that its revenue and earnings could be flat or decline by up to 10% compared to 2024 levels.

The primary concern for investors is the potential loss of business from federal government clients as the new administration re-evaluates spending priorities. According to the company, approximately $90 million of its estimated 2025 revenues have already been affected by stop-work orders and contract terminations across multiple federal agencies, with the majority of the impact related to USAID contracts.

While ICF International expects its commercial energy business, which accounted for over a quarter of its total revenue in Q4, to continue growing robustly, the company warned that the maximum downside risk to its 2025 total revenues is a 10% reduction from 2024 levels, primarily driven by cuts to its federal programmatic work.

In response to the disappointing guidance and risks to the federal business, Canaccord Genuity downgraded the stock from Buy to Hold and lowered its price target to $100 from $200.